Lord Warner: My right honourable friend the Secretary of State for Health has made the following Written Ministerial Statement.
	I am today announcing that we will be rolling out across the National Health Service a new programme of financial diagnostic checks and providing the opportunity for two-star acute specialist and mental health trusts to apply for NHS foundation trust status. The concerns about financial management in some parts of the NHS have encouraged us to work with Monitor (the statutory name of which is the Independent Regulator of NHS Foundation Trusts) to develop these new financial diagnostic tools and pilot them in two strategic health authority areas. These new financial tools will help trusts prepare for foundation trust status. Bringing two-star-rated organisations into the applications process for foundation status will give a greater number of trusts the opportunity to put forward their proposals for foundation status.
	The Whole Health Community Diagnostic Project will drive a culture of improved financial management across the NHS and give acute trusts a clear indication of any areas for improvement before they embark upon the NHS foundation trust application process. It will assess the financial robustness and viability of all trusts that have not yet applied to become NHS foundation trusts, in the context of their wider health economies, as well as looking at other authorisation requirements such as management and governance arrangements. The project will provide an assessment of what needs to be done to get NHS acute trusts in England ready to apply for NHS foundation trust status.
	To be authorised as an NHS foundation trust by Monitor, applicants have to be able to demonstrate their clinical and financial viability and sustainability as well as their overall capacity and capability to take on the additional freedoms and flexibilities. Monitor's authorisation process is a disciplined and very challenging process. It ensures that NHS foundation trusts are clinically and financially sustainable, effectively governed, locally representative, legally constituted and well managed. This is important if they are to operate with sufficient autonomy, achieve and exceed national healthcare standards and become increasingly responsive to their communities. In allowing two-star acute, specialised and mental health trusts to apply to Monitor in addition to three-star organisations, there is no question of lowering standards for authorisation as an NHS foundation trust. Monitor will continue to be a rigorous as before in determining whether applicants can be authorised for foundation trust status.
	NHS performance ratings have so far only been used as a way of identifying which trusts could be invited to apply for foundation status, but they are not part of the formal authorisation criteria. In 2006, the Healthcare Commission (the statutory name of which is the Commission for Healthcare Audit and Inspection) will replace the NHS performance ratings with an "annual healthcheck" performance rating system. It is therefore an appropriate time for the Government to revisit the entry requirements for foundation status and to broaden the base for applicants because the three-star requirement is too restrictive.
	There are currently 32 NHS foundation trusts in operation. They are sustaining the core NHS principles of universality and equity, and collectively serving more than a quarter of the population in England. The continued rollout of NHS foundation trusts across the NHS is giving the public, patients and staff a louder voice in how their local healthcare services are designed and run. The Healthcare Commission's independent review of NHS foundation trusts and other reports have highlighted the significant benefits and opportunities presented by foundation status. We know that independence from central government control and greater freedoms are giving NHS foundation trusts the opportunity to innovate new approaches to healthcare and healthcare services, for the benefit of NHS patients.
	The Government remain committed to providing all NHS trusts with the opportunity to apply for NHS foundation trust status within the next three years. The decision on when to apply remains one to be taken locally.